A spin-off from mainboard-listed construction company Lian Beng Group is aiming for a Catalist listing.
SLB Development is offering 238 million shares at 23 cents each, comprising eight million shares by way of public offer and 230 million on placement to raise gross proceeds of $54.7 million. Its initial public offering (IPO) price would value the firm at $210 million, it announced yesterday.
Lian Beng Group will retain 73.93 per cent of SLB, which is now a wholly owned unit.
The listing is expected to raise net proceeds of $51.4 million with 32.9 per cent of gross proceeds going towards replacing its land bank and overseas expansion. A further 33.6 per cent is earmarked for funding development projects already in the pipeline and general working capital purposes. The balance will go towards repaying a bridging loan and listing expenses.
SLB executive director and chief executive Matthew Ong said the firm's strength lies in its joint-venture strategy, which helps it manage risks and undertake larger projects.
SLB's portfolio comprises five residential and mixed-use developments such as Spottiswoode Suites and KAP & KAP Residences. It also has three industrial property developments, including Eco-Tech @ Sunview and Mandai Foodlink, and the Hexacube freehold commercial project here. Its projects to be launched for sale in the second half of this year include three residential sites - Serangoon Ville, Rio Casa and Lorong 24 Geylang - and industrial projects Khong Guan Industrial Building and 50 Lorong 21 Geylang.
It also owns a stake in a mixed-use property development project in China's Hebei province.
Its ongoing and pipeline projects amount to a gross development value of about $892 million.
Mr Ong said the spin-off was necessary for reasons of identity. Parent Lian Beng, which was established in 1973 and listed in 1999, went into property development in 2000. "Over the last 10 years, the development business has actually grown, so the management feels it's time for us to stand on our own, considering that we've done decently in terms of our performance in the last three years," he said.
As a developer, SLB's cash flow and capital needs differ from that of Lian Beng's other businesses, said Mr Ong Hwee Li, chief executive of SAC Capital, the sponsor and underwriter for the invitation.
The S in SLB's name stands for Sing, or "new" in Mandarin.
After the spin-off, Lian Beng will continue with its other businesses in areas such as construction and building materials services and worker accommodation.
SLB's revenue last year; it had a net profit of $15.8 million.
SLB had a net profit of $15.8 million last year and revenue of $87.6 million. Mr Matthew Ong said SLB's portfolio is "a little over-concentrated in residential" and will balance it out with industrial and commercial projects. SLB also intends to venture into hospitality developments and source for projects in the Asia-Pacific, Western Europe and North America. China's key gateway cities will be a focus as well.
The IPO closes at noon on April 18 with trading expected to start on April 20.